Memorandum on the Objects of the Labour Relations Amendment Bill, 2017

MEMORANDUM ON THE OBJECTS OF THE LABOUR RELATIONS AMENDMENT BILL, 2017

166 No.41257 GOVERNMENT GAZETTE, 17 NOVEMBER 2017

1. OBJECTS OF THE BILL1.1 The Labour Relations Amendment Bill, 2017 ("Bill") seeks to amend provisions in the Labour Relations Act, 1995 (Act No.66 of 1995) ("the Act"), which includes amendments to- (a) section 32 of the Act, to provide for the process and criteria for the extension of bargaining council agreements to non-parties by the Minister of Labour ("the Minister"); (b) insert section 32A into the Act in order to provide for the renewal and extension of funding agreements of bargaining councils; (c) section 49 of the Act, to provide for the extension to the determination of the representativeness of a bargaining council contemplated to two years; (d) section 69 of the Act, to provide for picketing to occur through a collective agreement or by determination in terms of picketing rules that may be prescribed; (e) section 70F(2) of the Act, to provide for the deletion of the rules by the Commission; (f) section 72 of the Act, by providing for the classification of a ratified or determined minimum service; (g) section 75 of the Act, to provide for a panel that may vary or cancel a designation of a maintenance service on its own accord or on application by the employer or registered trade union; (h) section 95 of the Act, to provide for a ballot for a strike or lock-out to include a secret vote; (i) section 108 of the Act, in order to provide for the independence of the Registrar of Labour Relations ("Registrar");

(j) section 116 of the Act, to make provision for the appointment of an alternate chairperson when the chairperson of the governing body of the Commission for Conciliation Mediation and Arbitration ("Commission") is absent; (k) section 135 of the Act, to provide for a further extension of the conciliation process by the Director of the Commission ("Director") to no longer than five days; and (I) to insert sections 150A to 1500 into the Act which provides for the appointment of an advisory arbitration panel in the public interest and an advisory arbitration award by that panel and matters connected therewith.

1.2 The aforesaid proposed amendments also concerns matters to be prescribed in the Act, which empowers the Minister or where appropriate, the Commission, to make such regulations in terms of section 208 of the Act. The matters that may be prescribed includes- (a) in clause 4 of the Bill, default picketing rules and the information that must be provided by a trade union before a conciliator issue a certificate and determine picketing rules; (b) in clause 7 of the Bill, the manner in which a panel may vary or cancel a maintenance service; (c) in clause 9 of the Bill, the records of the meetings that must be provided by every registered trade union and employers' organisation; ( d) in clause 13 of the Bill, the application form of a council or private agency that must be submitted to the governing body for the accreditation of its dispute resolution panel; and (e) in clause 16 of the Bill, indicating- (i) the manner of consultation between the advisory arbitration panel and the parties to the dispute; (ii) the panel's terms of reference; (iii) the time period for when a registered trade union or employers' organisation must appoint an assessor for the panel and the manner in which the National Economic Development and Labour Council ("NEDLAC") must provide the Director with two lists respectively for the registered trade union and employers' organisation of assessors to choose from; (iv) the form on which an advisory arbitration award must be made; (v) the form on which a party to the dispute may apply for the extension of the seven day period within which the parties to the dispute must either indicate acceptance or rejection of the award; (vi) the manner in which a party to the dispute may reject an advisory arbitration award; and (vii) the manner in which the Minister must publish the advisory arbitration award.

2. DISCUSSION OF THE BILL

Clause 1: Amendment of section 32 of the Act2.1 Section 32: Extension of collective agreement concluded in bargaining council 2.1.1 The following four changes are made to section 32 of the Act: (a) The first is the extension of the period within which the Minister must extend a collective agreement if the parties to the agreement are only sufficiently representative. This is to allow for sufficient time for the Minister to consider any comments received in respect of the Minister's notice published in terms of section 32(5)(c) stating that an application for extension has been received. (b) The second is the changes to the representativeness requirements for the extension of collective agreements under section 32(2). That section required both the trade union party to the agreement to represent the majority of employees and that the members of the employer organisations party to the agreement to employ the majority of employees within the scope of the agreement. The amendment now only requires one or the other. In order to promote collective bargaining at sectoral level and in accordance with the jurisprudence of the International Labour Organisation ("ILO"), the operating principle underlying the extension of agreements is whether agreement applies to the majority of employees in the sector or scope of the agreement. In other words, the principle is now one of coverage rather than strict representativeness. (c) The third is the manner in which representativeness is determined. The original intention of the Act was that the representativeness of bargaining councils and their constituent parties would be determined annually by the Registrar and not each and every time a bargaining council referred a collective agreement to the Minister for extension. The amendments to both section 32(2)(c), (5)(a) and 49 seek to give effect to that intention. (d) The fourth is to give the Minister the power to make regulations on the procedures and criteria that bargaining councils must take into consideration for purposes of complying with the requirements for exemptions from collective agreements.

Clause 2: Insertion of section 32A into the Act2.2 Section 32A: Renewal and extension of funding agreements 2.2.1 The mischief which this amendment seeks to address is that the funding of bargaining councils and their pension, medical aid and other funds are effected through collective agreements. The failure to secure agreement to extend or renew those collective agreements threatens the continued existence of those bargaining councils and funds. 2.2.2 The amendment gives the Minister the power to renew and extend a funding agreement for up to 12 months at the request of any of the parties to the bargaining council if the agreement has expired or the parties to the agreement have failed conclude an agreement to renew or replace the funding agreement 90 days before its expiry. The Minister has to be satisfied though that the failure to renew the funding may undermine collective bargaining at sectoral level. 2.2.3 Provision is also made for a publication and comment procedure before the Minister may make such a decision and effect of a judicial review of such a decision.

Clause 3: Amendment of section 49 of the Act2.3 Section 49: Representativeness of council The amendment extends the determination of the representativeness of a bargaining council contemplated in section 49 to two years. Furthermore other amendments are made in order to align the provisions of section 49 of the Act with the amendment in the Bill to section 32 of the Act.

Clause 4: Amendment of section 69 of the Act2.4 Section 69: Picketing 2.4.1 The thrust of the amendments to section 69 of the Act is to prohibit a picket unless there are picketing rules in place - rules that the trade union is permitted to participate in making. The purpose underlying this limitation of the constitutional right to picket is to require trade unions to take responsibility for pickets to ensure that the constitutional rights of others, such as the constitutional rights to freedom and security of person, freedom of association, fair labour practices and property, are not infringed. The levels of picket line violence that has come to characterise strikes in the last few years requires more stringent regulation to ensure the orderly conduct of pickets in strikes.

Accordingly, the amendments to the section require a commissioner conciliating a dispute or the person appointed by a bargaining council to conciliate a dispute that may lead to a strike or a lockout to determine picketing rules if there is no existing collective agreement regulating picketing or the commissioner has failed to secure an agreement on picketing before the expiry of the conciliation period contemplated in section 64. The commissioner is required to determine the rules at the same time as issuing a certificate of an unresolved dispute in terms of section 64(1 )(a) of the Act. 2.4.2 The commissioner, in determining the rules, must do so in accordance with the default picketing rules prescribed or published in a Code of Good Practice and after taking any representations made by the parties to the dispute attending the conciliation meeting. Annexure B of The Code of Good Practice: Collective Bargaining, Industrial Action and Picketing provide default picketing rules. 2.4.3 Specific provisions are made for a direct application to the Commission on an urgent basis in certain circumstances such as the unilateral alteration of terms and conditions of employment and an unprotected lockout.

Clause 5: Amendment of section 70F of the Act2.5 Section 70F: Regulations for essential services committee In view of the regulations by the Minister contemplated in section 70F(1 ), section 70F(2) of the Act which provides for rules by the Commission, is deleted.

Clauses 6 and 7: Amendment of sections 72 and 75 of the Act respectively2.6 Sections 72 and 75: Minimum services and maintenance services 2.6.1 The amendments to section 72 of the Act provide for the ratification of minimum service agreements by a panel appointed by the essential services committee and a definition of minimum services. The definition clarifies that a minimum service agreement is one in which employees in an essential service are allowed to strike provided that a minimum service maintains a level of production or service at which the life, personal safety or health or the whole or part of the population are not endangered. 2.6.2 Provision is made to permit the panel appointed by the essential services committee to vary or rescind a designation or part of a service as a maintenance service.

Clauses 8 to 10: Amendment of sections 95, 99 and 100 of the Act respectively2.7 Sections 95, 99 and 100: Ad matters concerning a secret ballot 2. 7.1 Section 95(5)(p) of the Act requires trade unions and employer organisations that seek registration to have a provision in their constitutions requiring a ballot of members before embarking on a strike or lockout as the case may be. 2.7.2 Section 95(9) of the Act has been inserted to clarify that a ballot means any system of voting by members that is recorded and secret. The clarification is to provide for new technologies of balloting while at the same time ensuring good governance and secrecy. 2.7.3 Section 99 of the Act, which deals with the records that registered trade unions and employer organisations must keep and which includes ballot papers, is amended to include the attendance register and other prescribed record, and other forms of documentary or electronic records of a ballot. Section 100 of the Act is amended accordingly.

Clause 11: Amendment of section 108 of the Act2.8 Section 108: Appointment of registrar of labour relations 2.8.1 Section 108 of the Act is amended in order to clarify that the registrar and deputy registrars are independent and subject to the Constitution and the law must be impartial and exercise their powers and perform their functions without fear, favour or prejudice. 2.8.2 The amendments also include a prohibition on any person or organ of state from interfering with the functioning of the registrar. Clauses 12 to 14: Amendment of sections 116, 127 and 128 of the Act respectively 2.9 Sections 116, 127 and 128: Ad matters concerning the Commission for Conciliation, Mediation and Arbitration 2.9.1 Several amendments are made to various sections dealing with the Commission. The first is to section 116 of the Act which seeks to to give the governing body of the Commission the power to appoint an acting chairperson if the chairperson is absent or the office is vacant. 2.9.2 The amendment to section 127 of the Act seeks to provide that a council or private agency may apply for the accreditation of its dispute resolution panel. 2.9.3 The amendment to section 128 of the Act requires that an accredited bargaining council or private agency may only appoint a person to resolve a dispute if that person is accredited by the governing body of the Commission. This has been introduced to ensure that the persons appointed have the requisite qualifications and experience.

Clause 15: Amendment of section 135 of the Act2.10 Section 135: Resolution of disputes through conciliation 2.10.1 The amendments to section 135 of the Act seek to provide for the extension of the 30-day conciliation period in. order to ensure a meaningful conciliation process. The commissioner conciliating the dispute or a party to the conciliation may apply to the director of the Commission for an extension provided that the period does not exceed 5 days. 2.10.2 The Director may only extend the period if satisfied that the extension is necessary to ensure a meaningful conciliation process, a party's refusal to agree to the extension is unreasonable and there are reasonable prospects of reaching agreement. No extension is however permitted where the State is the employer.

Clause 16: Insertion of sections 150A, 1508, 150C and 150D into the Act2.11 Sections 150A, 1508, 150C and 150D: Ad matters concerning the advisory arbitration panel 2.11.1 In order to endeavour to resolve strikes or lockout that are intractable, violent or may cause a local on national crisis, the amendments seek to provide for the establishment of an advisory arbitration panel to on an expedited basis investigate the cause and circumstances of the strike or lockout and make an advisory award in order assist the parties in dispute to resolve the dispute. 2.11.2 The Director may only establish an advisory arbitration panel if directed to do so by the Minister or the Labour Court, on application by a party to the dispute or by agreement between the parties and only if one of three circumstances are present namely- ( a) The strike or lockout is no longer functional to collective bargaining, it has continued for a protracted period and no resolution appears imminent; or

(b) There is an imminent threat that constitutional rights may be or are being violated by those participating or supporting a strike or lockout through the threat or use of violence or damage to property; or (c) The strike or lockout is causing or may cause an acute national or local crisis affecting the conditions for the normal social and economic functioning of the community or society. 2.11.3 All three circumstances are recognised by the ILO as grounds for intervention by the State. The intervention, in accordance with ILO jurisprudence, advisory in nature and only binding if agreed or deemed to be agreed to by the parties to the dispute. The appointment of the advisory arbitration panel does not interrupt or suspend the right to strike or the recourse to lockout. 2.11.4 The Labour Court may only make an order directing the Director to establish an advisory arbitration panel if it is satisfied that the latter two of the three circumstances exist and the application is made by a person or association of person that are or will be materially affected by those circumstances. 2.11.5 The advisory arbitration panel consists of a senior commissioner to chair the panel and an assessor appointed by the employer and trade union parties to the dispute. If the parties do not appoint an assessor within the time to be prescribed by regulation, the Director must appoint an assessor from the lists of employer or trade union assessors determined by organised business and organised labour as constituted in NEDLAC. Provision is also made that if a party to the dispute fails or refuses to participate in the arbitration proceedings, the Director must appoint a person with requisite expertise to represent that party in the proceedings.

2.11.6 The advisory arbitration is to be conducted in a manner that the chairperson considers appropriate in order to make an advisory award fairly and quickly with minimum legal formalities. The chairperson is given all the powers of a commissioner under the Act and the power to order disclosure of information in accordance with section 16 of the Act. 2.11. 7 The arbitration panel must conduct its proceedings and issue an advisory award within 7 days of the hearing although provision is made for the Director to extend that period taking into account the urgency of the resolution of the dispute. 2.11.8 The advisory award must report on the factual findings and make motivated recommendations why its recommendations ought to be accepted. If the chairperson is not able to secure consensus of both assessors, the chairperson issues the advisory award on behalf of the panel. 2.11.9 The advisory award must be served on the parties to the dispute. The Minister must publish the award in the prescribed manner for public dissemination within 4 days of its issue. 2.11.10 The parties to the dispute are required to indicate their acceptance or rejection of the dispute of the advisory award within 7 days of the award or, if extended, a maximum of 13 days. 2.11.11 If they fail to do so, the party is deemed to have accepted the award. Before a party to the dispute rejects an award, it must consult with its members in accordance with its constitution and, if it does, it must motivate its rejection in the prescribed manner. 2.11.12 An advisory award is only binding if the party to the dispute has accepted or is deemed to have accepted the award. An advisory award can be extended to employees who are not members of the trade union parties to the dispute in accordance with section 23 of the Act. In the case of bargaining council agreements, the binding nature of an advisory award is determined in accordance with sections 31 and 32 of the Act as if the award was for all intents and purposes a collective agreement.

Clause 17: Amendment of section 208A of the Act2.12 Section 208A: Delegations This is a technical amendment in order to align the provisions of section 208A of the Act with the proposed to section 32 of the Act. Clause 18: Transitional provisions 2.13 Trade union and employer organisation constitutions were registered in the past without strike ballot requirements which is in contravention of section 95(5)(p) of the Act read with section 95(9). The Bill seeks to provide for transitional provisions in order to provide for the Registrar to consult with national office bearers of those unions and employers organisations on the most appropriate means to amend the constitution to comply with section 95(5)(p) of the Act and issue a directive as to the period within which the amendment to the constitution is to be effected in accordance with the amendment procedures set out in their respective constitutions. 2.14 Until a registered trade union or employers' organisation complies with the directive and the requirements of section 95(5)(p) read with section 95(9) of the Act, the trade union or employers' organisation must conduct a secret ballot of members before engaging in a strike or lockout as the case may be.

3. DEPARTMENT/BODIES CONSULTEDThe Departments of Economic Development, Small Business Development, Trade and Industry and the National Treasury were consulted on a regular basis during the process of engagement in the National Economic Development and Labour Advisory Council on the Labour Relations Amendment Bill. In addition, the South African Policy Service and the National Prosecuting Authority have also been consulted in relation to the amendments, including the Accord on Collective Bargaining and Industrial Action and the Code of Good Practice on Collective Bargaining, Industrial Action and Picketing which were developed alongside of the amendments. Organised business, organised labour and the organised community sector were consulted during the engagement in the National Economic Development and Labour Advisory Council.

4. FINANCIAL IMPLICATIONSThe financial implications of the amendments to the Labour Relations Act lie in the cost of publishing the bill, the Code of Good Practice on Collective Bargaining, Industrial Action and Picketing and the regulations to the Act. Costs will also be incurred by national government in conducting public information sessions for stakeholders that is estimated to amount to R450,000.00. Further costs associated with implementing the amendments will be incurred by the CCMA in relation to the establishment of Advisory Arbitration Panels, conducting secret ballot's, stakeholder workshops on the Code of Good Practice, commissioner training and material development. The total estimated cost associated with the Labour Relations Act amendments are R27.6 million.

5. IMPLICATIONS FOR PROVINCESThe Labour Relations Act and its implementation is a national competence and there is therefore no direct implication for Provincial government other than the amendments affecting provincial government as an employer that is expected to comply with the legal amendments to the Act.

6. IMPLICATIONS FOR MUNICIPALITIESThe Labour Relations Act and its implementation is a national competence and there is therefore no direct implication for Municipalities other than the amendments affecting them as an employer that is expected to comply with the legal amendments to the Act. The amendments to sections 72 and 75 of the Act dealing with minimum service agreements will be of direct relevance to municipalities as they do operate a number of services that have been determined to be essential.

7. PARLIAMENTARY PROCEDURE7.1. We have considered all the provisions in the Bill in light of Schedule 4 and 5 to the Constitution and found that the Bill does not deal with any of those matters. In our scrutiny of the provisions of the Bill we observed that the Bill is concerned with the subject matter of labour relations which are not listed in Schedule 4 to the Constitution. Since the Bill does not in a substantial measure pertain to matters listed in Schedule 4 and 5 to the Constitution, we are of the opinion that the Bill must be dealt with in accordance with the procedure set out in section 75 of the Constitution. 7.2. It could be argued that labour relations, in particular the provisions which relate to picketing may affect trade and public policing. What is important to note in this instance is that the picketing envisaged by the Bill occur from the perspective of organised labour and in view of the parties involved in organised labour, the effect which picketing may have on trade and policing is negligible. Consequently the provisions in the Bill do not have a substantial effect on matters listed in Schedule 4 to the Constitution. In light of the aforesaid we are of the view that the Bill must follow the procedure contemplated in section 75 of the Constitution. 7.3 The Department of Labour and the state law advisers are of the opinion that this Bill must be dealt with in accordance with the procedure established by section 75 of the Constitution since it does not fall within a functional area listed in Schedule 4 to the Constitution. 7 .4 The state law advisers is of the opinion that it is not necessary to refer this Bill to the National House of Traditional Leaders in terms of section 18(1 )(a) of the Traditional Leadership and Governance Framework Act, 2003 (Act No. 41 of 2003), since it does not contain provisions pertaining to customary law or customs of traditional communities.